World Bank to create the first blockchain bond

Written by Peter Walker

10/08/18

The World Bank has chosen Commonwealth Bank (CBA) to be the sole arranger of the first global bond to be created, allocated, transferred and managed using blockchain technology.

The Australian dollar denominated ‘bond-i’, or Blockchain Offered New Debt Instrument, has been developed with input from the investor community, including Northern Trust, QBE and the Treasury Corporation of Victoria.

Once launched, it will be issued and distributed on a blockchain platform operated by the World Bank and CBA in Washington and Sydney, respectively.

As part of its mandate to reduce poverty and promote lasting development, the World Bank issues between $50-60 billion annually in bonds for sustainable development. It is increasingly focusing on helping countries transition to sustainable economies that are technology-led, while exploring the benefits of disruptive technologies, to accelerate progress towards the Sustainable Development Goals.

World Bank treasurer Arunma Oteh said that given the transformative role of emerging technologies, the organisation continues to prudently seek new opportunities.

“Our sincere appreciation to our pioneer blockchain bond investors, who are partnering with us on this transaction because of our common desire to strengthen markets, improve efficiency and transparency, and enable more robust issuance processes,” she stated. “Our goal is to continue to harness innovation for the benefit of markets and our mission of ending poverty and boosting shared prosperity.”

The blockchain platform was designed and developed by the CBA Innovation Lab’s Blockchain Centre of Excellence. CBA and World Bank are using a private Ethereum blockchain for the project, although a statement noted that other blockchains are developing rapidly and CBA remains open to other options in the future.

An independent review of the blockchain platform’s architecture, security and resilience was conducted by Microsoft.

James Wall, executive general manager of institutional banking and markets at the CBA, said they took a collaborative approach by partnering with other financial institutions, government bodies and corporates to innovate through blockchain.

“We are delighted to have partnered with the World Bank and fully support its vision of making innovative use of technology such as blockchain to increase the efficiency of financing solutions to better achieve their goal to end extreme poverty,” he added.

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